USA – TEXAS Trends and Developments Contributed by: Sydnie Shimkus, Bell Nunnally & Martin
The Ames case clarified the scope of viable discrimi - nation cases, including for employees of majority groups with protected characteristics under Title VII. Texas’ major modification to its non-compete statute for healthcare providers While the NLRB has not spoken further on non-com - pete matter, Texas has acted to clarify the enforce - ability of non-compete agreements for healthcare providers. On 20 June 2025, Governor Greg Abbot signed Senate Bill 1318 (SB 1318) into law. The bill amends the Texas Covenants Not to Compete Act (the “Act”), codified at Section 15.50 of the Texas Business & Commerce Code, by placing stricter requirements on the enforce - ability of non-competes for physicians, and expands those requirements to govern non-competes for dentists, nurses and physician assistants. SB 1318’s amendments to the act are set to take effect on 1 September 2025. SB 1318 is meant to restore the occupational freedom of healthcare providers, honour healthcare provid - ers’ responsibility to patients and improve healthcare access. SB 1318’s implementation will mean more mobility for healthcare providers in a high-healthcare- demand market while respecting the time and effort healthcare employers put into building patient rela - tionships and marketing their services. Key Provisions of SB 1318 Important provisions of SB 1318 include the following. • Who is covered: Along with physicians, SB 1318 expands the act’s protection to cover dentists, professional and vocational nurses and physician assistants. Excluded from the act’s protection are healthcare managers and directors working in an administrative capacity or other healthcare provid - ers not specifically named in the bill. • Buyout provision cap: The buyout provision in a non-compete agreement is capped at the health - care provider’s total annual salary and wages at the time of termination of the contract or employment. This provision replaces the “reasonable price” standard for buyouts and the option to have the buyout amount determined by an arbitrator.
• Time limit: The non-compete agreement cannot last for more than one year starting from the date the contract or employment was terminated. • Geographic area limit: The non-compete agree - ment cannot cover more than a five-mile radius from the location at which the healthcare provider primarily practiced before the provider’s contract or employment was terminated. • Clear terms: The terms and conditions of the non-compete agreement must be “clearly and conspicuously” stated in writing in the healthcare provider’s contract or employment agreement. Clear and conspicuous language should be free of ambiguous language and be easy for a reason - able person to discover and locate, such as being bolded or capitalised. • Involuntary discharge without good cause (phy - sician-only): A non-compete agreement will be voided and unenforceable against a physician licensed by the Texas Medical Board if the doctor is involuntarily discharged from his or her contract or employment without good cause. SB 1318 defines good cause to mean a reasonable basis for discharge based on a physician’s conduct, job performance and contract or employment record. Steps towards compliance The amendments to SB 1318 apply only to non-com - pete agreements entered into or renewed on or after 1 September 2025. Non-compete agreements entered into before then will be governed by the law previously in effect. Tips for Current Employee Retirement Income Security Act (ERISA) Compliance ERISA sets minimum standards for establishing, administering, amending and terminating pension benefit plans and welfare benefit plans maintained by most private sector employers. ERISA generally covers retirement income; deferred compensation; medical, sickness and vacation benefits; scholarship funds; and apprenticeships or training programmes. The statute, and supporting case law, can be daunt - ing, but the following five tips follow recent trends the author has seen to help ensure compliance.
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